A Customer’s reaction to price is colored by the PROPOSITION attached to the price

by Joseph Norcott

At the July meeting we discussed the new book “No B.S. Price Strategy” by Dan Kennedy and Jason Mars.  I want to share some of the topics we covered and discussed at the meeting.

First, you do not let your customers dictate your price.  You are entitled to making a profit.

Let me repeat this again….

Don’t let your customers dictate your price.  You are entitled to making a profit.

Don’t forget this valuable statement.  It makes a difference whether you survive or not in this new economy.

The customers that are always looking for something real cheap or only for free are not the right type of customer.  It’s better to sell to fewer customers that are willing to pay your price for a product or service you provide than to sell in volume!  Selling in volume only makes you comparable to the next competitor.  Don’t get into a price war.

So how do you charge prices that make a profit for you?  

It’s the formula:

USP + UVP + IO + USGP + UEV=Profits

Ok so what’s with the formula? 

Unique Selling Proposition + Unique Value Proposition + Incredible Offer + Unique Safety Guarantee Proposition + Unique Experience Proposition = The Price that makes you Profits

So let’s break down this formula….

Unique Selling Proposition (USP)

Why should I, your prospect, choose to do business with you vs. any and every other option available? – Dan Kennedy ©

You need a USP that continues to grow with your business as it grows.   However you can have multiple USP’s that relate specifically to different products and services.

Implicit in your USP related to price strategy you have to answer the question:
Why should I your prospect choose you regardless of price, be unconcerned about price, and never consider comparison shopping based on price? Dan Kennedy ©

This is obvious – but you must explain that EVERYTHING has DIFFERENT VALUE to DIFFERENT PEOPLE…WATER in the DESSERT can cost more than  sitting next to a spring…
Affluent people buy the “same” thing at higher prices because of their ability and many other reasons…

Unique Value Proposition (UVP)

The best value proposition makes price a non-issue or makes the product pay for itself.
The value also can include intangibles as well as tangibles. Don’t leave out all the intangibles when you build your value proposition or price.

What matters is what the CUSTOMER sees and says the VALUE is versus what the PRICE is.
You must go out of your way to make it obvious and apparent that VALUE is more than price.

Irresistible Offer (IO)

You need to ask yourself what is it that will make it an irresistible off to your customer.
You have to put yourself in the psyche of your customer.  You may need to A/B test it to see which offer works best.

So they absolutely cannot say no!!!

Start with working on the first three and I’ll follow up with the last two in my next post.  These are first key values to the formula.  Without them you’ll be competing against your competitors on price.

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